Tesla rushing Model 3s to China before possible tariff hike

Tesla is sending boatloads of Model 3s to China ahead of a possible tariff hike.

Tesla is rushing shiploads of its Model 3 electric sedan to China ahead of a possible tariff hike that could eat into the California-based automaker's profits.

Tesla is shipping at least three cargo ships full of Model 3s to China before March 1, when a tariff truce between the United States and China is set to expire. Negotiations between the two nations are ongoing, but if no accord is struck by next month, China could impose a 40 percent tax on all vehicles imported to the country from the U.S.

Tesla would be particularly exposed to an escalated trade war since it doesn't have a production facility in China. The automaker is currently building a new factory in the world's largest EV market, but it won't be open for business until late 2019 at the earliest.

Moreover, Tesla could also be vulnerable to sanctions put into place by the United States against China. Tesla sources the Model 3's main computer module from a Chinese supplier, so any new tariffs would drastically increase the company's manufacturing costs.

Tesla has requested a waiver for the computer component if a trade war comes to fruition, but the U.S. has yet to make a ruling on the matter.